The Government changes the definition of SME to reduce bureaucratic obstacles for small companies

The Government approved this Tuesday in the Council of Ministers a draft bill with which it seeks lighten the bureaucratic burdens faced by thousands of SMEs in Spain. The text, which is still in the initial processing phase, establishes new billing and asset thresholds from which a company is classified as small, medium or large for the purposes of communicating its financial information.

The idea is that this initiative of the Ministry of Economy pursues raise these thresholds so that more small companies can access the simplified regime of financial information. A regulatory framework that requires a lower level of detail and breakdown for these companies, which makes it easier for firms with less economic capacity to comply with their obligations. Thus, it would be possible to “reduce its administrative burdens” and favor “a more efficient business environment,” the ministry says in a press release.

For example, for a company to be considered small with the new regulationits assets should not exceed 7.5 million euros and its turnover could not exceed 15 million (the requirement of having 50 employees or less remains the same). Currently, these amounts are four and eight million respectively, so the Economy proposal involves increasing them by 87.5%.

In the case of medium-sized companies, the maximum asset threshold is raised from the current 20 million to 25 and billing would go from 40 to 50 million (increases of 25%). Again, the number of employees to fall into this category would remain stable at 250 people. For large companies, all companies that exceed the thresholds just mentioned would be considered within this category.

The Ministry of Economy’s estimate is that, with the new framework, 98.5% of Spanish companies will be able to carry out their accounting with reduced administrative burdens. It is expected to benefit 5,813 companies who currently do not enjoy this facility.

Higher audit thresholds

Likewise, the text that has been approved by the Council of Ministers raises by 25% the thresholds that determine which companies are required to present an audit. The amounts would go from the 2.85 million assets included in current legislation (dating from 2013) to 3.565 million. Regarding turnover, the threshold grows from 5.7 to 7.125 million, while the number of employees remains constant at 50.

Any signature that exceeds At least two of those three limits would be required to be audited. Economy calculations suggest that some 4,300 companies that currently must pass an audit would no longer be bound by the new size requirements.

The department headed by Carlos Cuerpo points out that the approved modifications “will allow fewer companies to face more complex and costly obligationsthus making it easier for them to redirect those resources to investment, digitalization or employment, and reinforcing their competitiveness.”